“It wasn’t that long ago that if you asked anybody to reach into their back pocket to fund some sort of insurance program, they’d have told you to bog off. Because insurance, obviously, is a venal activity, and we all hate it!”

This is Julian Roberts, the head of risk and analytics at the insurance broker Willis Towers Watson.

Setting aside the provocation, he continues in a more introspective vein. Climate change adaptation is all about risk management, and for all its shortcomings, insurance brings discipline to that process, he says. Precisely because of this, millions of dollars are now beginning to flow into insurance programs for nature.

Roberts is referring to a series of experiments in which he and others are merging the unsentimental world of insurance with the idealistic world of coral conservation.

The product they’re creating is parametric insurance, typically used to cover property against natural disasters—so-called “acts of God” in the industry. But it is now catching on in coral-rich countries as a way to protect reefs from climate impacts.

Its key attribute is speed. Where traditional insurance can take months of vetting to verify an actual loss, parametric insurance works by triggering a payment as soon as a predefined threshold (or parameter) is met. If a hurricane approaches a reef, insurers use meteorological data, such as wind speed, to determine if the storm intensity meets the threshold. If it does, a predetermined payout goes to the policyholder. No damage assessment required.

Payouts—ranging from tens to hundreds of thousands of dollars—typically fund dive teams that immediately head out to the reef in the storm’s aftermath. They have only a brief window before the coral will die after being damaged in the storm. The teams remove coral-choking debris, reattach broken chunks, and place fragments in nurseries where new generations are raised to be returned to the wild.

Until recently, the idea of underwriting a coral reef would have seemed bizarre to most in the industry. “Now it’s a topic. . .and I think that’s very exciting,” Roberts says, who describes parametric insurance as “in essence, blindingly simple.”

At least on paper, that’s true. How well it works in the wilds of the climate-changed ocean, however, is an open question.

Depending on how you look at it, coral reefs are either the best or worst ecosystem to insure against climate change. On the one hand, they are extremely valuable, contributing trillions of dollars annually in fisheries, tourism, and storm protection—and insurance is made to protect value. On the other hand, reefs are extremely vulnerable, and it’s unclear how sustainable a solution insurance will be in the long term.

Nevertheless, the idea has taken hold in Hawai‘i, Fiji, and Central America and is spreading to Asia and the Caribbean, too. Major companies including AXA Climate, Swiss Re and Munich Re are entering the fray. For them, the appeal lies partly in new, albeit modest, revenue streams. The parametric insurance market is expected to reach $34 billion by 2033; according to separate estimates, coral insurance is forecast to grow from $124 million today to $488 million by then. Companies are perhaps more motivated by the positive optics that these climate projects can bring, Roberts says. “They see the purpose in this and wish to be associated with it.”

The first ever parametric policy for reefs was put to the speed test in Mexico. The Nature Conservancy (TNC) had a policy that covered a 100-mile stretch of coastline and was triggered in 2020 by Hurricane Delta. The $850,000 payout enabled divers to reattach 1,200 corals and recuperate another 9,000 fragments in nurseries—all within a week of the storm.

One of the most expansive policies exists between insurer AXA Climate and the MAR Fund, a private nonprofit conservation fund established across several countries that lie along Central America’s 1,000-kilometer-long Mesoamerican Barrier Reef. Purchased from Munich Re in 2021, the policy, which costs an average $200,000 annually, insures 11 coral conservation sites in six countries along that reef.

Payouts are based on the hurricane’s strength and proximity to the reef area. A powerful storm with winds of 137 knots or more right over the covered area would trigger payouts in the highest band. A hurricane of the same strength striking 75 kilometers away would lead to smaller payouts. When a hurricane last struck the Belizean section of the reef in 2022, its 70-knot winds triggered a $175,000 payout within days. This supported the reattachment of broken corals in the Turneffe Atoll.

When a bleaching event swept through soon after, some of the money was used to develop a detailed coral map that identified surviving areas with more resilient specimens. “It was terrible that this happened, but it allowed us to take this [mapping] action and then replicate it region-wide,” says María José González, executive director of the MAR Fund.

In Hawai‘i, where vast reef ecosystems provide over $2 billion in tourism gains, fisheries, and flood protection, the formality of insurance has brought unexpected benefits. In 2022, TNC purchased a policy that now covers 555,137 square kilometers of corals across Hawai‘is eight main islands; it will release a minimum payout of $200,000 after a hurricane. While the mechanism hasn’t been triggered yet, it has inspired action. “We had this reef insurance policy and suddenly we had to figure out, what the heck are we going to do with the payout?” says Julia Rose, marine project manager at TNC. Quickly, they assembled a network of partner organizations across the islands, comprising 60-plus people, each trained to respond when a storm hits. “The policy did catalyze this network, and I think it is extremely overdue.”

Meanwhile, in hurricane-ravaged countries such as Fiji, payouts are making a difference even at the modest end of the scale. “In northern Lau where we are, it’s really exposed,” says Filimone Mate, a marine scientist with the nonprofit Kaibu Foundation. The coral-fringed islands were utterly devastated by the record-breaking Cyclone Winston in 2016. But in 2024, the Kaibu Foundation, which is tied to a local resort, purchased from the Pacific Catastrophe Risk Insurance Company a policy covering three islands. When a smaller category two cyclone hit the region in 2025, it triggered the first payout of $45,000, allowing divers to collect broken corals and build a nursery to raise them in.

In a nearby lagoon on Kaibu, Mate and his team have now laid out a lush ocean banquet of hundreds of baby corals, including heat-tolerant varieties, on tables that are tethered to the sea floor. “Here we are, still rolling with the punches,” Mate says, adding that he was recently heartened to see sharks returning to the area.

The key pain point is finding reliable financing. In other words, who should pay ever higher premiums? Unlike traditional insurance, policy holders do not own the reefs. Instead, nonprofits and investment funds are buying policies and relying on philanthropists and corporate donors—sometimes creating an uncomfortable mix. The Fiji project, for example, is supported through social investment funds by the Australian mining multinational, BHP, which has agreed to purchase its reef policy for five years.

Yet coral reef ecologist David Obura sees this more as an advantage than a problem. If these insurance instruments can get buy-in from commercial sectors and channel money to where it needs to go, all the better. “You will never get to that scale of finance if you’re just depending on research and philanthropic finance,” says Obura, who chairs the Intergovernmental Platform on Biodiversity and Ecosystem Services.

Others raise alternative financing options such as baking coral insurance into government conservation budgets or levying a tax on local industries. “It would be great if the reef users contributed—for example, cruise ships, big resorts, and ports authorities. They generate income from the reef. They should be, from my point of view, the main contributors to this type of insurance,” says Claudia Ruiz, coordinator of the MAR Fund’s reef rescue initiative.

Insurers themselves could also subsidize premiums to reflect the benefits they reap from healthy reefs that protect coastlines from flooding and storms. But Roberts says the industry hasn’t grappled with that quite yet.

More existential challenges lie ahead— particularly about how well parametric insurance will be able to protect reefs in ten or 20 years if large-scale climate events accelerate. Long before parametric reef insurance emerged, debate was simmering over whether coral restoration actually works. And even if it does, restored sites can quickly fall prey to pollution, overfishing, disease—and bleaching. One study showed that 57% of restored reefs experience bleaching within five years.

Ironically, parametric insurance doesn’t yet cover reef bleaching events. “The single biggest acute loss that we’ve had has been because of a thermal event,” says Rose in Hawai’i, recalling a 2015 bleaching catastrophe that eroded at least a third of the islands’ reefs. “But it’s tricky, because you need to identify a trigger that has enough third-party data to actually make a policy and to sell this to insurance companies,” Rose explains. For now, some of the most robust data exists around wind speeds, hence most insurance policies are built for storms.

Yet the industry is grappling with this, too—and seeing pipelines for new parametric products. In Indonesia, home to most of the world’s coral diversity, work is underway to develop a warm water trigger to form the basis of a parametric insurance product for coral bleaching. Others are designing insurance that would be triggered by heavy rainfall, which drives runoff into the ocean, clouds the water, and starves corals of light.

By its nature, insurance for coral reefs is an idea that needs time to prove itself. In the meantime, many will be watching closely to see how it evolves and adapts to coral’s rising vulnerabilities. “There’s no silver bullet,” says Obura, who believes parametric insurance should be part of a holistic approach to protect reefs—including conservation, fisheries policies, pollution management, and upstream measures to tackle climate change.

“But ultimately, I think there’s also something larger happening with the emergence of tools like this,” he says, “which is that they’re starting to normalize the idea of accommodating the full values of nature, and building the financial architecture to do that.”

Top Images: Great Barrier Reef before and after Cyclone Ita in 2014. ©The Australian Institute of Marine Science Long-term monitoring program.

Emma Bryce is a journalist based in London. Her work has appeared in The Guardian, Wired UK, Audubon Magazine, The New York Times, Ensia, and Yale e360, as well as Anthropocene.